Texas Medicaid physician pay gets hike in new settlement

The Legislature must allocate the $700 million in state funds needed to implement the agreement, which awaits court approval.

By Amy Lynn Sorrel, AMNews staff. May 21, 2007.

Texas is poised to raise Medicaid reimbursement rates by 25% for physicians who treat children. The move, part of a settlement put to a federal judge in April, would draw to a close a 14-year-long dispute over alleged program deficiencies.

The agreement's price tag is estimated at $700 million. About $200 million of that would go toward the physician fee increase, and an additional $50 million would be designated for certain specialty services.

Although the pay increase is a small chunk of the settlement, "it's a necessary part, because you can't do the services without the doctors," said John R. Holcomb, MD, chair of the Texas Medical Assn. Select Committee on Medicaid. The TMA did not take a position in the case but made recommendations to both sides in settlement negotiations.

If approved, the agreement would resolve a case alleging that the state had failed to follow federal requirements to make sure low-income children have access to Medicaid early periodic screening, diagnosis and treatment services.

Several families sued the state in 1993 in a class-action lawsuit charging that the program did not have enough doctors to take care of children in Medicaid due to low pay, was not following up with families for necessary checkups, and did not adequately inform families on Medicaid that they were entitled to these services.

The case, Frew v. Hawkins, resulted in a 1996 consent decree designed to improve Medicaid services. But the state refused to follow the order. Officials argued that Texas complies with federal rules and that the consent decree was not enforceable. The families since have been fighting to force the state to follow the order.